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Can’t beat ’em? Compete with them! Microsoft has lowered their prices in China in an attempt to thwart pirating.

From Ars Technica:

In recent years the Chinese government has attempted to crack down on the country’s local PC manufacturers that use pirated software, and this crackdown has accounted for a small dip in piracy estimates throughout the country. Since China has the second-largest PC market, and the fastest growing one at that, Microsoft’s tight relationship with China’s major PC manufacturers means that the company will see plenty of profits from Vista sales in China.

Nevertheless, Microsoft is still very concerned about the “retail” software market, where piracy is still the norm. The price cuts are aimed at enticing users into buying legal retail software, while making it slightly less profitable to sell pirated software.

The move is more significant than it might first appear, because Microsoft has historically been resistant to pricing its products based on local markets. Note that the original pricing of Windows Vista in China ($200 for Basic, $238 for Premium) is essentially identical to the pricing in the United States, despite the two countries having vastly different economic conditions. The new cuts make Chinese versions significantly less expensive in comparison, which may irk some US consumers, but you know what they say about the price of tea in China.